Don't Race Out To Buy Telstra Group Limited (ASX:TLS) Just Because It's Going Ex-Dividend

Simply Wall St.08-23

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Telstra Group Limited (ASX:TLS) is about to go ex-dividend ...

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Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Telstra Group's shares before the 28th of August in order to be eligible for the dividend, which will be paid on the 26th of September.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7042":"综合电信业务","TLS":"Telos Corporation","TLS.AU":"TELSTRA GROUP LTD","BK4115":"综合电信业务","TLGPY":"Telstra Group Limited","BK7511":"ESG概念","BK4097":"系统软件"},"translate_title":"不要仅仅因为Telstra Group Limited(ASX：TLS)要除息就急于购买它","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TLGPY":1,"TLS":1,"TLS.AU":1},"content_text":"Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Telstra Group Limited (ASX:TLS) is about to go ex-dividend in just four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Telstra Group's shares before the 28th of August in order to be eligible for the dividend, which will be paid on the 26th of September. \n The company's upcoming dividend is AU$0.09 a share, following on from the last 12 months, when the company distributed a total of AU$0.18 per share to shareholders. Calculating the last year's worth of payments shows that Telstra Group has a trailing yield of 4.5% on the current share price of AU$3.98. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing. \n View our latest analysis for Telstra Group \n Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Telstra Group distributed an unsustainably high 128% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 102% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here. \n Cash is slightly more important than profit from a dividend perspective, but given Telstra Group's payouts were not well covered by either earnings or cash flow, we would be concerned about the sustainability of this dividend. \n Click here to see the company's payout ratio, plus analyst estimates of its future dividends. \n\n\n\n  ASX:TLS Historic Dividend August 23rd 2024\n \n\nHave Earnings And Dividends Been Growing?\n Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Telstra Group's earnings per share have been shrinking at 5.0% a year over the previous five years. \n Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Telstra Group's dividend payments per share have declined at 4.7% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders. \n To Sum It Up \n Is Telstra Group worth buying for its dividend? Not only are earnings per share declining, but Telstra Group is paying out an uncomfortably high percentage of both its earnings and cashflow to shareholders as dividends. This is a starkly negative combination that often suggests a dividend cut could be in the company's near future. It's not that we think Telstra Group is a bad company, but these characteristics don't generally lead to outstanding dividend performance. \n With that in mind though, if the poor dividend characteristics of Telstra Group don't faze you, it's worth being mindful of the risks involved with this business. For instance, we've identified 3 warning signs for Telstra Group (1 is concerning) you should be aware of. \n A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2461302166"}